March2014CoverMedicare Advantage – Understanding Medicare Advantage Special Needs Plans
by Patrick Freeman LUTCF, CDHC, CHCRS, MBA • Even if you have no interest in Medicare Advantage plans, you can really do someone (a client?) a huge favor by pointing them in the right direction and referring them to a specialized broker who is knowledgeable in this murky part of the insurance market.
HSA Growth: Still Strong 10 Years Later & Poised to Grow Under ACA and Exchanges
by Chris Bettner • National carriers and economists confirm that HSAs are the product to watch in 2014. Growth in private exchanges, based on employer defined contributions, should accelerate HSA growth.
Dental–Are you a Dental Selfie?
by Mark Roberts • Some of your clients may qualify for self funded dental plan and have the opportunity to become better off financially. If you are an employer, see if it makes sense for your company to have a self-funded dental plan, which is sometimes referred to as a “direct reimbursement plan.”  You could save big money by becoming a dental selfie!
Vision Coverage –  20/20 Marketing Insights from the Transitions Academy 2014 Vision Conference
by Leila Morris • More than 100 vision plan reps, brokers, and HR managers attended the seventh annual managed vision care track at Transitions Academy in Orlando at the end of January.  A major focus of this year’s event was how the Affordable Care Act has affected vision plans.
Vision Coverage Trends in an Evolving Employee Benefits Market
by Kimberly Landry • Due to concerns about losing income from medical products, many producers plan to change their business practices. They see supplemental products, including vision, as a prime opportunity.
Disability Considerations Before And After Surgery
by Art Fries  • There are many questions that a claimant must consider before going on a disability claim. Having had surgery merely adds more questions to the equation.
Voluntary Benefits – Helping Clients Boost their Employees’ Financial Wellness
by Elizabeth Halkos  • Employers are discovering that financial wellness benefits can help them build employee loyalty, increase productivity, and improve job satisfaction.
Long-Term Care – Underserved Market Highlights the Need for Long Term Care Planning – Advisors Have Opportunity to Educate Clients
by Roger Schultz  • Agents, brokers, and advisors to talk openly with their clients and prospects about their plans for the future and the funding options available to them, including long-term care insurance.
HMO Survey–This Won’t Hurt A Bit: Injecting Insight Into HMOs with Our Annual HMO Survey
Each year California Broker surveys health maintenance organizations (HMOs) in the state with direct questions about their plans. We hope that this valuable information will help you serve your savvy healthcare clients better.

Medicare – Understanding Medicare Advantage Special Needs Plans (SNP)

by Patrick Freeman LUTCF, CDHC, CHCRS, MBA

You may have heard some of these trigger words when speaking to a client or just engaging in polite everyday conversation: “Diabetes, type 1 and type 2,” “pacemaker,” “Asthma,” “COPD,” “kidney failure” (ESRD), or “cardiac arrhythmias.” These words can provide an opening for you to help someone get better and more focused medical care for a chronic condition or disease.

Even if you have no interest in Medicare Advantage plans, you can really do someone (a client?) a huge favor by pointing them in the right direction and referring them to a specialized broker who is knowledgeable in this murky part of the insurance market.

Medicare Advantage special needs plans (SNPs) are Medicare Advantage HMO plans that limit membership to people with specific diseases, chronic conditions, and characteristics. These plans are sold by private companies in very specific markets. Not all types of SNPs are available in all areas, especially chronic-condition SNPs. The benefits are usually much richer than with non-special needs Medicare Advantage prescription drug plans (MAPDs) because they are capitated at a significantly higher rate compared to a regular MAPD. The insurance plan puts together benefits and provider networks for a specific geographic area, usually a county

Even agents who are certified to sell MAPD plans may not be as familiar with SNPs because most insurance plan providers require extra training and certification to sell and enroll these particular plans. Some plans even require a separate agent contract to sell SNPs

Even if your plate is too full to sell Medicare Advantage plans, it is a good idea to at least be familiar with the concept of SNPs so you can advise your clients to talk to an agent with expertise in this area. I would really recommend referring your client to a broker who knows this market and class of products because there can be wide disparity in benefits and networks, even in the same geographic area. This is because the product and market focus can be slightly different for each medical plan. SNPs are not uniformly available in all California counties, and not all insurance plans provide SNPs.  There are three types of SNP plans.

The Chronic Condition SNP

The client with one or more of the following severe or disabling chronic conditions would qualify:

• End stage renal disease
• Diabetes Type 1 and Type 2
Heart conditions (Congestive Heart failure, cardiovascular disorders, coronary artery disease, and cardiac arrhythmias, etc.)
• Breathing conditions (chronic bronchitis, emphysema, asthma, pulmonary fibrosis, and pulmonary hypertension)

These are the chronic plans available in California. There are SNPs in other parts of the country for additional conditions.

The Dual Eligible SNP

The client would have both Medicare and Medi-Cal (Medicaid). The provider has the option of billing Medi-Cal or the insurance plan for some services. In early 2014, California is implementing a program to move dual-eligible recipients to Medicare managed care (HMO) plans. Cal MediConnect would move 456,000 dual eligible Medicare and Medi-Cal enrollees living in Alameda, Los Angeles, Orange, Riverside, San Bernardino, San Diego, San Mateo and Santa Clara counties into managed care programs. Los Angeles County would cap enrollment at 200,000.

Although dual eligibles have the option of not being enrolled in managed care, residents in those counties would be automatically enrolled unless they object. The project, which is intended to run through 2016, was scaled back considerably from its original proposal, which would have enrolled dual-eligibles into managed care programs in all 58 California counties.

The cost of using the fee-for-service model has been enormous. The governor and legislature are attempting to move a medical population that is used to going to whoever provider they want to an HMO model with a primary care physician gatekeeper. Since the first phase of this conversion is basically voluntary, it remains to be seen whether this program will be effective. The Centers for Medicare and Medicaid Services (CMS) has ruled that the state of California cannot make the move to managed care plans mandatory for the MediCal population.

The Institutional SNP 

This SNP is for institutionalized individuals. These are patients who reside for at least 90 days or longer in a long-term care facility (defined as a skilled nursing facility, nursing facility, intermediate care facility, or in-patient psychiatric facility.)

SNPs have richer benefits than do non-SNPs. For example, one diabetes plan has a zero copay for insulin, which can be a huge expense to diabetic patients. Most of these plans also have generous medical transportation benefits. The patient can order one-way local transportation for doctor visits and therapy appointments. Most of these plans also include a comprehensive HMO dental plan at no extra charge.

A patient applies for a chronic SNP by completing a questionnaire and identifying a physician who has treated them for a particular condition. The patient is enrolled in the plan assuming that the physician agrees, in writing. The patient will be terminated from the SNP plans if, within 60 days of enrollment, the physician does not confirm, in writing, that the patient has the particular chronic condition. If the patient is turned down, a special-enrollment period is granted and the patient can enroll in another non SNP MAPD plan.

Dual eligible plans require proof of current participation in Medicare and Medi-Cal (Medicaid). The providers have a choice of accessing the dual eligible SNP benefits or the Medi-Cal benefits so the patient should present both cards at each visit. As a practical matter, many patients have a hard time finding Medi-Cal providers for many of their needed services.

Medi-Cal members need to have a $0 share of cost to qualify for most dual eligible plans. This means that they pay no premiums and no copays for most services and they pay minimal drug copays. Medi-Cal monitors the patient’s income so it is possible for them to become ineligible for the dual eligible plan. If this occurs, a special-enrollment period is generated so they can enroll in another MAPD plan. This very special population needs extra servicing. Many dual eligibles can also qualify for a chronic SNP. If their income is fluctuating, it may be more practical to enroll in a chronic SNP because the difference in benefits between the plans is sometimes not that great for a particular patient.

Perhaps the biggest feature of the SNP plans is that they can enroll any time of the year unlike regular MAPD plans and Part D, which the client can only enroll during the annual election period.


Patrick freeman LUTCF, CDHC, CHCRS, MBA is a Certified HealthCare Reform Specialist for Freeman insurance Agency in Laguna Beach. For more information, call 949-497-7473.

HSA Growth – Still Strong 10 Years Later & Poised to Grow Under ACA and Exchanges

by Chris Bettner

Health savings accounts (HSAs) will have the highest growth rate among all consumer driven healthcare accounts (CDH) in 2014, according to the Consumer Driven Health Care Institute (CDHCI). HSAs are expected to hit close to 21 million covered lives. By mid-2013, there are expected to be 18 million HSAs with assets hitting $18.1 billion and growing.

National carriers and economists confirm that HSAs are the product to watch in 2014. Growth in private exchanges, based on employer defined contributions, should accelerate HSA growth.

The fear that the Affordable Care Act (ACA) would crush HSAs has been put to rest in a private study by HSA Consulting Services (December 5, 2013). The study states conclusively that HSAs will do well on the federally run exchanges. The plans are widely available and attractively priced. HSA eligible plans are 11% less expensive than older legacy plans; and families save an average of over $1,000 a year on premiums, according a report by CDHCI. Forty-four percent of the Bronze plans are HSA compatible, a critical indicator.

Cost is not the only growth factor. The basic tenants of HDHP/HSA lead people to become savvy healthcare consumers. This has been reported for the 10 years that HSAs have been available (since 2004). People make more thoughtful decisions on their healthcare spending. This does not mean that people do not get necessary care. Quite the contrary; people ask for generic medication; use emergency rooms for true emergencies; and use preventive care services at a much higher rate than do their counterparts in other products.

The triple tax advantages of a HSA, unlike a Roth IRA, never appear as income when deducted from payroll. So people have the tax advantage of money going into the account pre-tax, growing tax-free and, when used for qualified medical expenses, being used tax-free as well. Some people with a HSA never make withdrawals to cover medical expenses. These people, Baby Boomers for the most part, consider their HSA a retirement account. Other people use the money each year to pay for their deductible expenses. That’s the beauty of a HSA. They are extremely -flexible, triple tax advantaged accounts.

The investment opportunity with a HSA is only limited by IRS regulations. The instrument must be liquid (stocks, bonds, mutual funds). The ability to invest is very flexible but determined by your HSA administrator. Year-over-year growth of balances in these accounts proves that people really will walk into Medicare with a nest egg.


With over 30 years of experience in healthcare sales and management with health insurance carriers, Chris Bettner serves as executive vice president of Business Development for Sterling Health Services Administration ( and was a co-founder of the company in 2004. Prior to joining Sterling, Chris was Vice President of Sales for Blue Shield of California. She held similar positions at Lifeguard, FHP, Independence Blue Cross and MetLife. Chris is also a national spokesperson on HSAs and consumer directed healthcare programs.

Are You a Dental Selfie?

by Mark Roberts

Some of your clients may qualify for self funded dental plan and have the opportunity to become better off financially. If you are an employer, see if it makes sense for your company to have a self-funded dental plan, which is sometimes referred to as a “direct reimbursement plan.” You could save big money by becoming a dental selfie!

Employers can optimize their return-on-investment by self-funding employee benefit programs rather than being saddled with a more expensive group insurance plan. In increasing numbers, employers – both large and small – are minimizing healthcare expenses with the self-funding route. Some 40 million people are employed by organizations with 500 to 5,000 employees. They are prime candidates for stop-loss insurance.

Self-funding freestanding and carve-out benefits can bring dramatic cost-savings to many employers. But it can also expose the company to financial risk from unexpected high claims costs for medical, dental, or other health care issues. One key way to protect corporate assets is to use stop-loss coverage with self-funding plans.

Aggregate stop loss insurance protects employers from catastrophic loss. The policy will reimburse the employers for eligible claims in excess of a predetermined amount at the end of the contract period. The employer has covered the downside risk with a plan that makes sense for the company.

In this economy, that’s what it’s all about. However, dental services are predictable and rarely catastrophic, which means that employers can afford to fund their own benefits. Wide fluctuations in cost and use of services, typical in the practice of medicine, occur rarely in dental services.

Brokers need to know the ins and outs of self-funded dental plans when proposing this type of benefit to employers. Providing a dental plan to employees helps them maintain ongoing, preventative oral health. With regular dental visits, participants are likely to prevent cavities and gum disease, which is a major element to all types of dental plans. This helps keep the cost of dental insurance low, and is an attractive option for employers that are entertaining the benefit as a self-funded plan.

Instead of purchasing insurance coverage from an insurance carrier, the employer can fund the risk up to a certain level in which a reinsurance carrier is engaged. The amount of risk assumed depends on the size of your organization, the nature of your business, and your tolerance for risk.

Moving from a fully funded plan to self-funded dental plan can provide substantial cost savings. Reserves for claims are held by the employer and released as claims actually occur.

Let’s take a look at the major differences between fully insured dental plans and self-insured dental plans. Fully insured plans can be considered packaged deals in that a monthly rate or premium includes all major aspects of dental insurance. The employer pays the insurance company fixed rates or monthly premiums per enrolled employee for access to a provider network, plan design, and benefit administration.

Here are some key responsibilities and aspects to consider for fully insured dental plans:

Risk: The insurance company assumes all risk for fully insured dental plans, preserving the employer’s available funds and potential cash flow. 

Benefit Administration: Monthly premiums for fully insured plans include benefit administration, claims payment, and compliance with HIPAA and state regulations. 

Benefits and Plan Design Management: The insurance company has the authority over benefits and the plan design. The employer may negotiate or select another plan design to adjust dental benefits to meet the employees’ needs. With self-funded plans, the employer pays for claim costs as they incur. A series of equations and formulas calculate or predict claim costs, which are divided into monthly costs per enrolled employee, similar to a monthly premium in the fully insured plan. 

Here are some key responsibilities and aspects to consider for self-insured dental plans:

Risk: The employer accepts all the risk. If claim costs drastically exceed the predicted amount, the plan’s funding is at risk of being exhausted, and the employer is at risk of losing money. 

Benefit Administration: Through an administrative-services only (ASO) agreement, a third- party administrator is needed to provide claims processing, a provider network, general benefit administration, and compliance with HIPAA and state regulations. 

Benefits and Plan Design Management: Although the third-party administrator makes the initial claim decision and benefit payments, the employer has authority over the benefits and benefit payments. The plans give the employer some flexibility in plan design. However, self-funded plans are governed by ERISA. This limits the employer’s ability to set minimum qualifications, exclude employees (i.e. part-time employees), or have a waiting period for new hires. The decision between fully insured and self-funded dental plans should be made with careful consideration of the company’s situation and a comparison of costs and risk assessments. 

Dental care and preventive services are universal and continuous, but specific individual needs may vary. Don’t double the risk by skipping the math. Those alogarithms combined with the understanding of the above key aspects can reveal major savings or a prediction of failure. Self-funding provides a way to save precious benefit dollars and give employers options to customize a plan their demographics.

Brokers should give clients some more time to spend on the things that matter most to their business or organization, with these advantages:

Self-Funded plans are not subject to premium taxes. 

Self-Funded plans are exempt from state mandated benefits. 

Claims may be paid as they are incurred. 

Self-Funding allows the employer to choose the most efficient plan administration. 

Self-Funded plans free the employer from having to pay monthly premiums. 

Employers are looking for ways to share costs with their employees to control rising premiums for dental benefits. One way is to require employees to contribute to the cost of their coverage. The employer’s cost will be greatly reduced when it is shared by the employee. Plan costs can be shared between the employer and the employees through premium contributions and through co-payments, co-insurance, deductibles, and annual maximums.

Premium Contributions

Insurance premiums are determined by the insurance company and often regulated by the state. Insurance premiums are usually billed and paid on a monthly basis. Employers may require employees to share the cost of the plan premium. The employer will pay a portion of the premium and the employees may set aside pre-tax money to pay for the remaining premium through payroll deductions. A dental plan can also be a voluntary plan sponsored by the employer, but with the premiums paid 100% by the employee through payroll deductions.

Any payment that employees make for their coverage in a self-insured dental plan can still be handled through payroll deductions. Instead of being sent to an insurance company for premiums, the contributions are confined by the plan until claims are paid or put in a trust that is allocated by the plan.

Co-payments, Co-insurance and Deductibles

A co-payment, or “co-pay” as it is sometimes called, is a flat fee that the patient pays at the time of service. The fee is usually small. Co-payments are common in capitation plans, such as dental health maintenance organization (DHMO) plans, and preferred provider organization plans (PPOs).

In many plans, patients must pay a portion of the services they receive. This payment is called “co-insurance,” and is usually a percentage of the service cost after the plan pays benefits. For example, if the plan pays 80% of the cost, the patient pays 20% of the cost. If the plan pays 50%, the patient pays 50%, and so forth. Co-insurance is common for PPO products and less common in DHMOs.

A deductible is a flat amount that the employee must pay before they are eligible for certain benefits. The deductible may be an annual or a one-time charge. Generally, the greater the co-payment, co-insurance and deductibles are, the lower the premiums. The time and money employers need to spend managing their plan is a cost that they also need to consider.

Plan administration usually includes enrolling and disenrolling participants (employees and dependents), COBRA and HIPAA administration, and dealing with billing, eligibility and claims problems among other duties. A broker can provide many of these services. A broker can assist with claim issues and billing problems, assist with late enrollees, handle conversion policies, report monthly claim experience, and conduct new employee educational meetings.

When working with an employer, be sure to discuss what administrative duties the employer will assume and which will remain your responsibility as the broker. Regardless of the plan, here are some tips from the California Dental Association that are applicable to sponsors, brokers, employers, and employees:

1. Read the plan benefit booklet. Dental health coverage is provided by the organization (business, union, association, etc) to help you handle the costs of staying healthy. Using them wisely is your responsibility. 

2. Know your options. Be familiar with the exclusions and limitations of your coverage. 

3. Communicate with your dentist, employer, and insurance company. Keep everyone informed of your experiences. 

4. Practice good oral hygiene. Follow the hygiene habits prescribed by your dentist. 

5. Ask questions. Be a partner in your own dental health. Do yourself a favor and prepare all you can on self-funded dental plans. If you are a broker, learn that business well, as dental is the most requested benefit after medical coverage. 


Mark Roberts’ professional sales background includes 30 years of sales and marketing in the tax, insurance and investment markets. Mark is a licensed life, health and accident insurance agent in all 50 states and D.C., for insurance products and discount health plans. He serves as manager of National Accounts at Careington International Corporation ( Additionally, Roberts works with clients needing insured products ( ) in the U.S. and discount dental and optical schemes in the U.K. ( ). Roberts has been writing a health care blog for the past seven years, ( ), which is a topical weblog about various health care issues. He also regularly contributes articles to magazines for both medical and dental topics in the U.S. and the U.K. You can reach him at



20/20 Marketing Insights from the Transitions Academy 2014 Vision Conference

by Leila Morris

More than 100 vision plan reps, brokers, and HR managers attended the seventh annual managed vision care track at Transitions Academy in Orlando at the end of January.

A major focus of this year’s event was how the Affordable Care Act (ACA) has affected vision plans.

A recent survey by Transitions Optical Inc., presented at the conference, reveals why it’s more important than ever to educate employees about their vision benefits. Nearly 60% of employees don’t know how health care reform will affect vision insurance coverage and more than half are worried about changes to vision coverage due to the Affordable Care Act. They are worried about being hit with cost increases, having different vision coverage than their children, and not understanding how to get reimbursed. “This lack of knowledge is something worth addressing. Vision plans and employers can enhance their relationships with employees by keeping them informed and alleviating their fears,” said Smith Wyckoff, key account manager of managed care/online retail for transitions optical.

The good news is that interest in vision benefits remains higher than ever with 83% of employees choosing to enroll compared to 78% in 2012 and 76% in 2011. Seventy-nine percent of members used the plans to get eye exams in 2013 compared to 64% in 2012, which shows that efforts to educate employees on preventive eye care are paying off. But there is still room for improvement since more than one in five are not using their benefits for a comprehensive eye exam and more than one in five aren’t taking their children to get eye exams.

The challenge is that employers spend minimal time educating workers about vision benefits. So it is not surprising when employees fail to enroll in vision benefits or fail to utilize the benefits when they do enroll, according to a consensus paper by the National Association of Vision Care Plans (NAVCP), which was presented at the conference. In the paper, medical directors from affiliated vision carriers looked at how to increase interest in vision benefits. “If the public doesn’t value what vision benefits offer, none of the industry’s other efforts matter,” said Julian Roberts, executive director of NAVCP.

Consumers have become more discriminating with their health care dollars, which puts more pressure on the managed vision care industry to make sure that vision care is perceived as necessary. With health care reform, the focus on medical benefits will continue to be the top priority for most employers, leaving little time to focus on vision benefits. Even though vision benefits are very low-cost compared to medical benefits, some employers may be resistant to increasing costs at all.

Participants agreed that it is important to remind employers about how offering vision benefits can lower medical costs. Education should reinforce how an eye exam can provide early identification of diabetes and other serious health issues. It would also be helpful to explain how utilizing vision benefits can reduce claims with other benefits, such as disability and life insurance. Also, vision benefits should be incorporated more into health and wellness programs to reinforce how powerful they can be to overall health and well-being.

Vision Benefits Can Boost Productivity

Participants agreed that a fresh message tied to productivity could pique employer interest in vision benefits. At the conference, Ophthalmologist Dr. Vincent Young presented clear evidence that productivity suffers when an employee has vision problems. Seventy-nine percent of employees encounter at least one visual disturbance at work, and 53% take at least one break a day to rest their eyes, according to new research sponsored by Transitions Optical.

With so many workers reporting eye problems, it’s not surprising that 53% are taking breaks to rest their eyes during the workday compared to only 29% in 2011. Wyckoff said, “That means there has been a 45% increase in people taking breaks from their workday to rest their eyes in the past two years, potentially a result of employees working longer hours and being exposed to more electronic devices.” While women are more likely to say they suffer from eye problems at work, men are more likely to say they take breaks because of eye problems.

Employees can lose up to 15 minutes of working time a day to eye-focusing problems, which can occur with eyestrain and fatigue. This translates into employers losing more than $2,000 per year for each employee who suffers from these issues. Wearing the right eyewear with anti-reflective coatings and lenses to reduce glare can alleviate many of these visual disturbances.

Forty-seven percent of employees complain about tired eyes. About a third complain about light reflecting off of their computer screen, dry eyes, and blurry vision. Eighteen percent say their eyes tear up. Sixteen percent are bothered by light from their personal devices while another16% are bothered by reflections from outdoor surfaces.

Anyone who has ever had a headache at work can understand how it reduces productivity. Twenty-nine percent of workers say that eye problems give them headaches. In fact, headaches cost the nation $17 billion dollars in absenteeism, lost productivity, and medical expenses, according to the National Headache Foundation.

Participants in the consensus group say that the productivity angle is under-used when promoting vision benefits. They note that the increased use of smart phones, tablets, and computers put a greater strain on the eyes. Participants also agreed that providing messages on the importance of children’s vision correction and protection could pique interest in vision benefits since parents are often more interested in their children’s health than their own.

How HSAs Affect Vision Benefits

Health care dollar hoarding is another concern, according to the consensus paper. More employers are offering high-deductible health plans with a health savings account (HSA). At the same time, fewer employers are offering flexible spending accounts (FSAs). FSA funds accrue in full immediately at the beginning of the year, but expire at the end of the year, creating urgency for consumers to use them. Vision wear and vision care spending are highly associated with FSAs.

With HSAs, funds do not accrue immediately, but rather paycheck by paycheck. So most employees who convert to an HSA only have a small amount to spend on health care with their first paycheck. HSA funds can be carried over instead of being lost at the end of the year, eliminating the urgency to “use it or lose it.” Employees with HSAs may be more likely to delay eye exams or put them off if they’re not experiencing symptoms. This is a dangerous trend for the industry and for employee health and productivity, making it more important than ever to motivate employees to prioritize their eyes, according to the consensus report.

What Drives Vision Benefits 

Fortunately, many trends are bringing good news to the vision benefit industry. Vision benefits have been garnering more attention since the ACA has designated pediatric vision services as one of the 10 essential health benefits. There will be more coverage for children who are at risk for undetected vision problems and eye-related health issues.

In the past, brokers didn’t pay much attention on vision benefits — focusing, instead, on significantly higher-margin medical benefits. But many brokers are now thinking about how vision benefits can supplement their declining health plan commissions. Brokers are also interested in sharing some good news of a low-cost vision benefit when they have to deliver bad news about increasing costs or coverage cuts on the medical side.

Another big trend is the popularity of voluntary plans. During the 2007 roundtable, participants noted that some employers were hesitant to encourage utilization of vision benefits because it could increase costs for the company. But that barrier has been lowered since consumers now bear the brunt of these costs in the increasingly popular voluntary plans. Also, employers may be more open to pushing employees to get their eye exams in order to reap the medical and productivity benefits.

There are also important demographic trends that favor vision benefits. Employee populations, such as aging workers and ethnic minorities, are growing, and they are more interested in vision benefits compared to the general population. Carriers must ensure that their vision plans meet the needs and expectations of these growing groups while providing education in a respectful and culturally competent manner.

Employers must face the vision and eye health needs of aging workforce in order to optimize productivity and lower health care expenditures. The managed vision care industry also needs to address the needs of aging workers once they retire.

Vision plans are more popular among ethnic minorities. In fact, 80% of ethnic minorities say it’s important to have a vision plan, compared to 70% of people in the general population. Regular vision care and eye health education can address specific needs of ethnic minorities, according to Transitions research. For example, African Americans are twice as likely to be diagnosed with diabetes and to die from related complications. African Americans are also significantly more at risk for developing high blood pressure and vision problems related to HIV. Asian Americans are more likely to develop angle-closure glaucoma and type 2 diabetes. The diabetes diagnosis is often missed until it reaches a later stage because Asian Americans are less likely to be overweight. Asian Americans are also 13 times more likely to develop tuberculosis, which can lead to numerous complications throughout the body and eye.

Focusing on Eye Wear

Participants agreed that a campaign that generates consumer interest in eye health or a vision-related product could drive interest in vision benefits. Many vision insurance plans and even public education programs have increased awareness about the importance of preventive eye care, but there has been less focus on the eyewear component even though it is equally critical.

The eyewear side of the equation is even more compelling as consumers, who are coming out of tough economic times, want their vision plan to offer more bang for their buck. Two in three employees say they would be more likely to enroll or re-enroll in their vision plan if it includes premium lens options, according to a Transitions-sponsored survey. Consumers with a rich benefit plan can be first on the block to have the latest technology. Transitions Optical has launched a new lens option, which has been promoting to consumers in venues such as the Super Bowl and the Olympics. Transitions Signature VII lenses with Chromea7 technology are more reactive to indirect sunlight and reflected sunlight and become even darker on hot days. The lenses also feature more aesthetically pleasing gray and brown shades, making them look more like typical sunglasses.

Tips from Successful Benefit Advisors

Leading brokers gave first-hand accounts of how they are succeeding in today’s complicated market. Transitions Vision Benefits Broker of the Year, Sara Niemeyer, is an account executive for USI Insurance Services in Cincinnati. With nearly 100 offices, USI is the 10th largest insurance broker in the United States. USI has four offices in California — two in Irvine, as well as offices in Stockton, Woodland Hills, and Concord.

Niemeyer credits her success to making sure that all her clients understand the need for a vision plan that covers annual exams with dilation. She explains the connection to wellness and correlation between comprehensive vision exams and diabetic health. Niemeyer conducts staff surveys during renewal and enrollment periods and shares feedback with her human resource customers. Once a year, she visits with a staff wellness consultant to do onsite reviews of benefits, highlighting lens offerings and buy-ups. She also presents purchasing scenarios to show how much eyewear will cost.  “I think there’s an opportunity for more growth of vision in the current benefits landscape. Offering a vision plan beyond what’s included in standard medical coverage is a priority for employers,” Niemeyer said.

Finalist Jay Fiorello, from Ovation Benefits in Farmington, Conn., tells clients that eye exams offer a minimally invasive way to see into the human body, yet one that provides vital information. He explains that employees see immediate rewards in their vision benefits. He also stresses that vision benefits can help increase employee productivity by addressing poor vision and reducing absenteeism. He notes that vision benefits can also increase employee loyalty. Fiorello says that his approach has led two of his largest municipality groups and a number of his other clients to purchase vision benefits.

Finalist Trevor Stephens, account manager for RE Sutton & Associates in Indianapolis, approaches employers as an educator, not a sales person. He explains how an annual eye exam can provide early detection of vision problems and underlying medical conditions. He emphasizes access to wide network of eye care professionals, regular eye exams, and coverage of Transitions lenses. Stephens also attends meetings to stay on top of the latest enhancements to vision products. He credits his efforts to bringing significant business growth in 2013.

Vince Colonna, director of benefits for Broward Health, was named Transitions HR Visionary of the Year. Colonna says that offering vision benefits is a big satisfier for employees. “We want to safeguard their eyesight with eye care insurance and services because we recognize that healthy vision can boost productivity and reduce absenteeism. It provides for a better quality of life for our employee workforce, which provides better quality of care for our patients,” he added.

Broward’s previous vision plan had high enrollment, but there was concern over the lack of brand-name options on the eyewear side. A new unbundled plan offers an annual eye exam as well as access to thousands of options in frames and discounts on lens add-ons. More than 90% of the health system’s employees enrolled in the improved vision benefit. “Almost no one decided against participating in the plan when it was made an election, due in part to high employer investment that generously subsidizes the cost of the benefit,” he added.

To encourage enrollment, vision plan representatives visited each of the Broward Health facilities to answer questions and explain the coverage. Employees could also access a Web portal for additional information and review materials that were mailed. In the summer, Colonna will review utilization to decide if additional outreach is needed.

As these benefit professionals can attest, selling vision benefits is not without its challenges. But the payoff can be increased revenue as well as happier and healthier clients.

The consensus paper can be downloaded from and


Leila Morris is senior editor of California Broker Magazine.

Vision Coverage Trends in an Evolving Employee Benefits Market

by Kimberly Landry

“The only constant is change.” When it comes to employee benefits, this age-old maxim has never been truer.

As an analyst with LIMRA’s Group Insurance Research team, I have had a front-row seat to observing how the dynamics of today’s employee benefit market is changing. And from a less analytical perspective, I also have had the opportunity to interact with producers, and there is no doubt that much of their energy and focus is changing, too. Due to concerns about losing income from medical products, many producers plan to change their business practices. They see supplemental products, including vision, as a prime opportunity.

In January, for example, I was a presenter during the managed vision care track at the Transitions Academy conference – one of the largest meetings focused solely on the vision benefit. The enthusiasm by brokers in attendance was far beyond what you might expect. More producers than ever before are likely paying attention to trends affecting the vision benefit, recognizing that these trends foreshadow continued opportunity for incremental sales on the horizon, helping to protect their businesses during an unpredictable time. Recent LIMRA research provides insights into opportunities and challenges ahead for the vision benefit.

Vision Benefits — Room for Growth

One reason that producers may be looking more carefully at vision benefits is that there is still significant room to increase penetration of this product in the market. About 49% of private employers offer vision coverage to employees, ranking it behind medical, dental, and life insurance in terms of prevalence, but above other insurance benefits.

There is still a lot of room for growth, particularly at the smaller end of the market. Only 39% of small businesses with 10 to 19 employees offer vision coverage, compared to roughly 74% of these firms offering medical.

Health Care Reform — A Double Edge Sword for the Vision Benefit

Eighty-five percent of group producers expect health reform to have a neutral-to-positive effect on their group vision business while only 15% expect a negative effect. Some producers who have not focused on vision in past are planning to do so. Of the 60% of producers who plan to offer additional products in response to health reform, one third expect to add vision.

However, these brokers may find a challenging market for the vision benefit in the near future, with health care reform weighing heavily on the minds of employers. About half of employers expect health reform to have a negative effect on their business and their ability to offer medical benefits; very few expect a positive effect. Some employers will consider dropping medical benefits due to health reform, particularly if it leads to significant cost increases.

However, non-medical benefits — including vision — are not immune to the effects of health care reform. Employers are actually more likely to cut non-medical benefits than to cut medical coverage in response to rising costs. Thirty-nine percent of small employers (those with fewer than 100 employees) say they would consider eliminating some non-medical benefits if medical premiums increased rapidly. Twenty-two percent would consider eliminating medical coverage. Since medical coverage is considered the most critical benefit for attracting and retaining employees, employers who commit to offering it are more willing to let other benefits go in order to control their costs. Looking further, 38% would also consider switching one or more non-medical benefits from employer-funded to voluntary in order to manage expenses.

With health care reform creating uncertainty, offering non-medical benefits, including vision, is simply not high on employers’ priority list. Since employers are very concerned about controlling the costs of their health insurance and their benefit package, they are hesitant to add new benefits, and they’re more inclined to look for cost savings when premiums increase.

At the same time, increasing employee productivity and recruiting/retaining employees are considered less critical issues, which reduces the pressure on employers to strengthen their benefit packages. Only 25% of employers say that offering vision benefits is necessary to attract employees, representing a decline from prior years. For attraction and retention, vision coverage is considered less essential than medical, dental, and life insurance, paid time off, and retirement savings plans.

To be successful with the vision benefit, producers will need to educate employers on how much employees truly value this benefit.

Vision Benefit Highly Valued Among Employees of All Ages 

While employers may be ambivalent, employees place a lot of value on vision benefits, giving producers a reason to remain optimistic about this market. Sixty-five percent of employees say that it is important to have vision benefits. In terms of importance to employees, vision ranks below medical, dental, and retirement plans, but above all other non-medical benefits.

Employees also demonstrate a strong preference for keeping the vision benefits they have. When we presented employees with a hypothetical choice to make at least one change to their benefit package due to cost increases, 25% choose to leave vision alone and make changes to another benefit. Another 40% would be willing to pay a higher premium to keep their vision coverage the same. Of the rest, only 12% said they would choose to drop vision coverage while 23% would reduce their level of vision coverage to keep premiums level.

Employers generally assume that vision plans and all other benefits are significantly more important to older employees. But, research indicates that younger workers actually value vision benefits just as much. Since employers are deciding which benefits to offer, it is important to raise their awareness about the value younger employees place on these benefits.

Helping Employers Be the Hero

While employers may be reducing medical benefits or moving them to exchanges, producers can help them continue to provide value and increase their differentiation by offering robust supplemental benefits, such as vision coverage.

Employees value being able to get vision coverage at work as opposed to other purchasing channels. When given the choice, 62% of employees prefer to get vision coverage through their employer. The next most common response is “no preference.” Employees cite several reasons for this preference including the fact that it’s convenient; they can pay for their coverage through payroll deduction; and they don’t have to conduct background research or do comparison-shopping since their employer has done this work for them.

On average, 32% of eligible employees participate in vision benefits when the coverage is offered on a voluntary basis — meaning that they are responsible for the entire premium. Participation increases when the employer covers part of the premium. With the cost of vision benefits so relatively affordable to employers, producers can recommend supplementing or fully covering employee premiums as a strong differentiator.

Producers can also help employers by offering educational tools to communicate the value of the vision coverage. The need for education is evident since 25% of employees who decline vision coverage say they don’t need the benefit. All employees can benefit from regular eye exams for early detection of eye and overall health issues, so this response signals that the industry still needs to do a better job of communicating the value of this coverage.

Embracing Change

The employee benefit market will present many challenges in the near future, but forward-looking producers can find ways to turn this time of change into a time of opportunity. Traditionally, medical coverage has dominated conversations about benefits. Producers can use the current market disruption as an opportunity to shift the conversation toward offering a diverse, well-rounded benefit package that includes multiple products. This will be an important time to remind employers of the value that employees place on vision coverage. With this sound approach, producers can help employers differentiate their offerings and enjoy a stronger, more diversified benefit portfolio as a result.


Kimberly Landry is an analyst with LIMRA’s Group Insurance Research team. Since joining LIMRA in 2008, she has been responsible for conducting research on all aspects of the employee benefits industry, including sales benchmarking, compensation, and attitudinal and behavioral trends on employers, employees, consumers, and producers. She has authored numerous reports and articles on industry topics, in addition to delivering presentations on employee benefit trends to a variety of audiences. She recently presented, “Perceptions of the Vision Benefit Amidst Change” during the managed vision care track of the 2014 Transitions Academy event in Orlando, Florida. A complete copy of her presentation can be found in the presentations section of

Disability Considerations Before and After Surgery

by Art Fries 

When it comes to the contractual wording of a disability policy, surgery is typically an option for the insured. You hope that the surgery will help reduce or eliminate pain. I’m referring to situations that often involve overuse of hands or arms or significant stress on one’s cervical or low back areas.

Those most affected are professionals, such as surgeons, dentists, chiropractors, and optometrists. However, people who work hands on with a computer or are standing on their feet for long periods can face the same medical issues.

The key question then becomes, “Can I help my medical situation in my work life and my personal life? These two areas are often in conflict. And sometimes there are multiple medical symptoms involved that further complicate the issue.

Let’s look at several examples: You are a dentist with bi-lateral carpal tunnel syndrome that affects the use of your hands. You have surgery on two different occasions to correct the problem; and you now go back to work. But you are back to performing the same repetitive functions working with dental tools and a high-speed drill. Within a short period, your carpal tunnel symptoms return to your hands and you are back to square one — pain in your hands and difficulty performing on patients effectively and safely. A better way of handling this situation would have been to stop working and go on total disability, assuming your policy would pay you in your occupation. Then wait six or nine months and see how you feel. It may be at that point that you can function reasonably well without having to have any surgery. Or you may have created enough damage to your hands whereby surgery is called for. You may not be able to function any longer in your professional or work life, but you can now function much better in your personal life, such as being able to shave without pain.

Take the case of a surgeon who has an essential tremor in which their hands shake —  a condition that is worsened by stress. The surgeon may no longer be able to operate on a patient safely or effectively because they cannot tie knots or work with surgical tools. I have yet to see a medication that will resolve the tremors without side effects, leaving the surgeon in the same precarious situation. Some limited surgery options involve the brain, but even with a small risk factor (death), it becomes an option that one must consider very carefully.

If you do not have a disability policy and you face economic devastation, then surgery may be your only alternative. But if you have disability coverage, you can make the choice not to have surgery and collect disability benefits. There is also some limited radiation treatment available for these type of symptoms but you also have risk factors that one must consider carefully.

Another scenario is related to a dual occupation. You are an orthopedic surgeon with any one of a number of medical symptoms (bi-lateral carpal tunnel syndrome, shoulder, cervical, elbow, low back or hips). You have done a lot of procedures and are known for your surgical expertise. You may have surgery in one or more areas and are away from work for a relatively short period. You decide to eliminate the more complicated surgeries and reduce your surgical hours. To make up for some of the loss of income, you perform more office duties and see more patients related to chronic pain issues. You take on more administrative duties. Your goal is to put less strain on your body, but still work in your chosen profession as a physician. You have reduced your overall hours as well. You -suffer more than a 20% loss of earnings, which enables you to submit a partial disability claim and collect a percentage of your monthly benefits. After a year or two, you find that even with the reduced hours and less surgical procedures your pain threshold has increased to the point in which you feel you can no longer perform surgical procedures effectively and safely.

Your insurance agent or broker told you that if you could not perform surgery you would be considered totally disabled and could work at another job because you had a broad definition of “Your Occupation.” So you go on total disability and submit a claim. You have one of the older individual disability policies that pays you money for life. Since these policies are no longer available for purchase, you feel good about the decision to purchase disability policies while you were young and at a lower premium with a locked in rate.

After the insurance company(ies) has investigated the claim, they tell you that you have a dual occupation because you are both a surgeon and an office physician. They say you don’t do enough procedures to qualify as only a surgeon and that you can continue to work as an office surgeon. Since your income may have been reduced further, you will only be able to collect a higher percentage of your monthly benefit if you continue to work in your office. If you stop working, the insurance company may say that you don’t meet the definition of total disability and will pay you nothing. And if you continue to work, even in a further reduced capacity, you will only be paid to age 65 since partial disability only pays to age 65 — not for lifetime, as was the case with total disability. There is no contractual wording in your policies that says what percentage of your income must come from surgery. Insurance companies make these decisions from an administrative standpoint.

Having surgery will often help with your pain level. But, if your job requires a lot of repetitive movement or you stand on your feet for long periods, you could be reversing the successful aspects of the surgery and be back to the same pain level.

A disability claimant must always understand the language in their disability policy so they know how to act in their future life. The insurance companies’ claim processes continue to evolve long into the future. They will look for an opportunity to terminate a claim if your actions are in conflict with your symptoms.

One type of surgery might improve your medical condition to such a point that you are able to go back to work with very little loss of time and have your medical issues resolved. Another type of surgery won’t resolve your overall problem, but will improve your condition that you can work part time in your particular occupation. Or you might not be able to work in your occupation, but work in another occupation. Or you might not be able to work at any job, but improve your personal life with respect to your daily living activities.

Because of the variances in disability policy contractual language, what may apply for one claimant may not apply for another. Might the expectations of the insurance company be different from those of your attending physician? Does your attending physician know the differences among a personal disability claim, a workers’ compensation claim, and a Social Security disability claim?

If it is a personal claim, does that same physician know the differences among an individual policy, a group disability policy with an employer/employee relationship, or a group franchise policy covering members of the same profession on a national basis? Can a surgeon assume that after surgery a patient can go back to work in two months if they had an office job and the same two months if they were a chiropractor?

There are many questions that a claimant must consider before going on a disability claim. Having had surgery merely adds more questions to the equation.


Art Fries is a disability claim consultant providing advice on a national basis in the U.S. He is located in Nipomo, Calif.  For more information, call 800-567-1911, e-mail: friesart@, or visit

Voluntary Benefits–Helping Clients Boost their Employees’ Financial Wellness

by Elizabeth Halkos 

Brokers can help employers to structure voluntary benefits to boost employees’ well being and help provide a financial safety net. Forty-four percent of working adults say they are better off financially than they were one year ago.

Yet, 28% still have trouble meeting monthly household expenses and 44% say they don’t have at least $2,000 in emergency savings for unexpected expenses, according to a recent survey by Harris Interactive on behalf of Purchasing Power.

A March 15, 2013 BusinessWeek article reveals that nearly one in three employees took a hardship loan or distribution from their 401(k) retirement accounts in 2012, up from one in four in 2011. The three groups taking the most hardship loans were women, lower-income employees, and younger workers, according to the data provided by Bloomberg BusinessWeek. Thirty-four percent of women and 23% of men took 401(k) loans or distributions. Thirty-seven percent of those 30 to 44, took loans and distributions. Forty-five percent of employees earning $35,000 to $60,000 said they had to tap their 401(k) accounts last year.

According to the Harris Interactive survey, 44% of respondents worry about their personal finance during work hours and 45% spend two to three hours per week at work dealing with personal finances. When employees are spending that much time at work dealing with personal finances, it affects productivity.

The BusinessWeek article reveals that the following can affect company profits:

• Absenteeism: Financially stressed employees use more sick leave and are absent from work more often. 

• Presenteeism: Although employees are at work, they spend time on activities unrelated to their jobs, such as talking to creditors. The Integrated Benefits Institute reports that presenteeism can account for three times more lost work than absenteeism. 

• Health Concerns: Unhealthy workers produce a lower quantity and quality of work and bring higher health costs. Distress over financial matters is contributing to irritability, anger, fatigue, and sleeplessness for over 52% of Americans.

• Work Conflicts: Tardiness, incomplete work tasks, and accidents result when workers’ personal issues interfere with their jobs. 

• Dissatisfaction and Lack of Commitment: Financially stressed workers are less satisfied with their pay regardless of their salary. Their disenchantment with work can lead to lack of pride in their jobs and negative feelings about employers. 

In the never-ending quest to improve employee engagement, retain employees, and maintain high productivity, many U.S. companies have recognized the effect employees’ financial health has on performance and morale. Employees who are financially healthy (manage their money, have little debt, and have savings and retirement accounts) don’t have to worry or take time during work to deal with their finances. Thus, they are more productive.

More and more employers have discovered that they can build employees’ loyalty, increase their productivity, and improve job satisfaction by providing financial wellness programs. Many have discovered new, no-cost and easy-to-implement options to help employees develop healthier relationships with money. These programs can deliver significant value for businesses and their workers.

Progressive companies recognize this need. They also recognize the potential upside for employers who address financial stress. They are offering financial education and financial wellness programs at work, including on-site money management and financial planning seminars, to help employees change their money behaviors and increase their financial literacy. Others are providing no cost and no-liability voluntary benefits that include employee-purchasing programs.

Why Employees Like Voluntary Benefits 

Eighty-six percent of employees say it is important to be able to customize all of their benefits to fit their lifestyle. With voluntary benefits employees can choose what suits their needs. Employees can build a financial safety net by adding voluntary insurance products as well as non-traditional voluntary benefits, such as employee-purchase programs, pet insurance, and identity theft policies.

Employees perceive voluntary benefits as having a number of -advantages including the following:

• They provide more convenience because of payroll deduction. 

• They offer access to a wider range of useful benefits. 

• The employer has already done the research for them. 

• It costs less than -purchasing outside the workplace. 

Sixty-two percent of employees say they are interested in having their employer provide a wider array of voluntary benefits, according to a recent MetLife survey. Employers are providing financial education programs to encourage employees to manage their finances, reduce stress, and improve their health. The Personal Finance Employee Education Foundation reports that financial education helps save up to $2,000 per employee annually through increased productivity, lower healthcare costs, and better utilization of employee benefits.

Brokers Can Help Employers with a Solution 

Brokers can help employers by introducing voluntary benefits. Employee-purchase programs provide employees with a way to purchase household items and educational services through payroll deduction. Companies that include an employee-purchase program in the financial wellness benefit package help employees ease fiscal stress and regain their financial footing.

An employee purchase program promotes disciplined purchasing through manageable payments including a 12-month payment term and pre-set spending limits and controls to prevent over-spending.

For the employee, there is no down payment or ballooning interest, no late fees, and no additional fees beyond the all-inclusive price. In a nationwide Purchasing Power study, the typical employee who participates in an employee-purchase programs is a 35- to 44-year old married woman earning a mid-level income and having at least one child. This profile shares similarities with the demographic groups that are most vulnerable to financial stress.

A January 2012 survey of 2,091 Purchasing Power customers reveals that 94% of users said that the employee purchase program helps reduce stress associated with financial worries. Fifty-nine percent of employees said they would be at least somewhat likely to use an employee purchase program if they had access to it. Twenty-four percent said they would be very or fairly likely to use an employee purchase program in which a set amount was deducted from their paychecks to cover the cost of purchasing big-ticket items, such as appliances, computers, electronics, furniture, educational and services.

When employers help employees with their financial wellness, it pays off. Employees who are financially stable and experience a sense of financial well being are less stressed. Brokers can build stronger client relationships when they provide employers with voluntary benefits that create a healthier bottom line and more productive workers.


Elizabeth Halkos is chief revenue officer Purchasing Power. 

Underserved Market Highlights the Need for Long Term Care Planning

Advisors Have Opportunity to Educate Clients

by Roger Schultz 

California is riding the crest of a wave, with its population aging faster than the national average. An aging population is more likely to need long-term care services and that trend is evident in the Golden State. In 2009, about 1.7 million Californians used long-term care services and that number is expected to skyrocket by 2030, when 8.4 million California residents will be aged 65 or older. The number of those 85 and older is expected to more than double in the state by 2030, according to a report by the California Healthcare Foundation.

The cost of long-term care is also expected to rise. In Los Angeles County, for example, the annual cost of a private nursing home is expected to rise 63%, from $97,678 to $159,107 by 2023, according to a 2013 report by Genworth. This lack of preparedness highlights the need for agents, brokers, and advisors to talk openly with their clients and prospects about their plans for the future and the funding options available to them, including long-term care insurance.

About two-thirds of Californians said they could not afford more than three months of nursing home care. More than four out of 10 couldn’t afford even one month of care. According to a report by the Scan Foundation.

Many people have also experienced a long-term care need that affected them or a loved one. While California is leading the trend, other states are facing the same issues. The number of Americans age 65 and older is expected to double by 2060, according to the California Healthcare Foundation.

At least 70% of people over 65 will need long-term care services and support at some point, according to the National Medicare Handbook from the Centers for Medicare & Medicaid Services. Nationally, long-term care spending accounts for about $210.9 billion. About 22% of that total comes directly out of the pockets of consumers and less than 12% is covered by private long-term care insurance, according to the George Washington University, National Health Policy Forum.

The price tag for long-term care is expected to reach nearly $360 billion in the next two decades. Advisors need to take an active role in educating their clients and prospects about the options available and to help them put in place a written financial plan. Long-term care is likely one of the greatest retirement expenses facing Americans today. As mentioned, costs are rising across the board, with the most precipitous increase in the cost of assisted living facilities and nursing homes. For example, the median annual costs for a private nursing home have gone up by nearly $20,000, from $65,200 to $83,950, over the past 10 years.

Home-based care, through a home health aide or homemaker services, has also gotten more expensive. Of the 1.7 million Californians who received long-term care services in 2009, nearly 35% received care through home health agencies; 24% received personal care services; 20% received care in a nursing home; and 8% received residential care. Clients or prospects may be reluctant to raise the topic of long-term care for various reasons: they assume the cost will be much higher than it is and never apply; they have limited knowledge about long-term care insurance — often not knowing what questions to ask — and don’t want to sound uninformed; they are frustrated by confusing and sometimes incomplete information online; or they are reluctant to go online for fear their search will trigger a sales call.

These factors point to the important role that a trusted financial professional can play in breaking through these barriers by starting the conversation and educating clients about how long-term care insurance works.

Another big issue advisors face is the widespread belief in common myths and misperceptions. Many people believe, for example, that Medicare will cover their long-term care needs. Health insurance and Medicare are not intended to cover the cost of nursing homes, assisted-living facilities or in-home care – the care many people require later in life.

People may pay out-of-pocket until they are practically destitute; only then does Medicaid  (Medi-Cal in California) kick in. Many who thought they had saved enough to provide for their future needs end up impoverished. Advisors provide an important service in the long-term care marketplace, and people are looking to their advisors to educate them, advise them and guide their decisions.

So what can advisors do to meet the increasing need for long-term care insurance?  Here are five tips for working successfully with clients:

1. Help clients take the long view. Clients and families must understand that a loved one’s health status can change overnight. It’s better to have a long-term care plan and insurance in place prior to their health taking a turn for the worse. At that point, it may be cost prohibitive or simply may no longer be an option due to the age or health of the person who will need coverage. 

2. Discover the cost of care. Use resources like Genworth’s 2013 Cost of Care Survey ( to show your clients exactly what they’re up against so they can prepare to meet the challenges. The survey breaks out cost by state and regions. 

3. Get to know what your clients value: It’s up to you to understand what is most important to them so you can help them plan accordingly. People are often concerned about becoming a burden on their families. If a husband and wife are both elderly, for example, they may worry about the physical, mental and financial toll on their spouse if they are put in a position where they must be the primary caregiver. Still others want to leave an inheritance for their heirs or a bequest to a favorite charity and don’t want to  exhaust their funds paying for long-term care.  

4. Give your clients options that suit their needs: Be open to the option of partially insuring your clients’ long-term care funding needs. It doesn’t have to be an all or nothing proposition. Looking at long-term care insurance as a partial solution provides clients with meaningful, supplemental benefits in a price range they can afford.  

5. Stay in touch: Schedule regular conversations to review clients’ life circumstances, needs and goals. Be alert for any major life events or changes in health status for clients and family members. Stay attuned to clients who may mention knowing someone who has had to deal with long-term care funding for a parent. These situations often lead people to assess their own circumstances and serve as opportunities for financial professionals to work with clients to update their written plans and make sure their insurance coverage is still appropriate.  

Long Term Care Insurance an Essential Solution 

The number of people needing long-term care is expected to grow in the next few decades as the Baby-Boom generation ages and the number of people with Alzheimer’s and other dementias increases. By 2050, the annual number of new cases of Alzheimer’s is projected to more than double, according to the Federal Long Term Care Commission’s Report to Congress on Sept. 18, 2013. The report emphasizes the need for expanded awareness of long-term care, the importance of education, and the vital need for planning.

Financial professionals in California and across the country are in a unique position to serve in that role as they help clients secure their financial futures. Demonstrating how long-term care insurance can help protect clients and their families from being impacted by the costs of long-term care is an opportunity to build trust and rapport and become an indispensable, trusted advisor.


Roger Schultz is vice president of Product Development for Genworth.


This Won’t Hurt A Bit: Injecting Insight Into HMOs with Our Annual HMO Survey

Note: The PPO survey will be featured in the October issue.

1.Do you guarantee a time limit on getting referral/treatment routine, urgent, emergency? If not, how many days does it take?

Aetna: Our internal policy is five days for routine, two days for urgent pre-certification, and no referral is required for urgent or emergency care.

Blue Shield of California: Our appointment wait time standards are as follows:

• Preventive care (annual physical, annual GYN exam): within 30 calendar days

• Non-acute and routine care with personal physician: within 7 calendar days

• Non-acute or routine care with a specialist: within 14 calendar days

• Urgent care appointment: within 24 hours

• Emergency care (acute, life-threatening): immediately.

Cigna: While we don’t guarantee a time limit on getting appointments or referrals, we do have appointment accessibility standards and we monitor performance against these standards annually. Performance is monitored by analyzing several questions on the annual CAHPS (customer satisfaction) survey and reviewing customer concerns regarding appointment access.

Kaiser Permanente: For emergency medical conditions, enrollees should call 911 or go to the nearest emergency department.  Emergency care is also provided 24 hours a day, seven days a week from any Kaiser Permanente Medical Center or Plan Contracted Hospital.  The following standards for appointment availability were developed by the California Department of Managed Health Care (DMHC) and we’re committed to offering you a timely appointment when you need care.

• Urgent Care appointments — Offer the appointment within 48 hours of enrollee’s request

• Non-urgent appointments for primary care (PCP) — Offer the appointment within 10 business days of the request

• Non-urgent appointments with specialist physicians (SCP) — Offer the appointment within 15 business days of the request

• Non-urgent care appointments with a non-physician mental health care provider — Offer the appointment within 10 business days of request

• Non-urgent appointments for ancillary services (for diagnosis or treatment of injury, illness, or other health condition) — Offer the appointment within 15 business days of the request

In some cases, the wait may be longer than the time listed if the treating practitioner decides that a later appointment won’t have a negative effect on the member’s health. The standards for appointment availability do not apply to preventive care services. The standards do not apply to periodic follow-up care for ongoing conditions or standing referrals to specialists. Our telephone advice nurses are available 24 hours a day. If you have a medical concern, they can help you decide whether you need to get care.

UnitedHealthcare: Optimally, the specialist referral process should take less than 30 days from referral to appointment. We monitor this standard annually using the Consumer Assessment of Health Plans Survey (CAHPS) member satisfaction survey. We adjust our goals by market depending upon past performance and national percentile benchmarks. Our standards are as follows: Routine Appointment less than 30 days, specialist appointment less than 30 calendar days, and urgent care less than 24 hours. We also have the Express Referrals program that streamlines the referral process. A primary care physician (PCP) in a participating Express Referrals provider group may refer a member to a specialist in one of many specialties in their group without prior authorization from the group’s utilization review committee. Members pay their normal office visit co-payment for a referral to a specialist.

2. Do you have any conditions/diagnoses/symptoms that are referred automatically?

Aetna: Yes.

Blue Shield of California: No; however, Blue Shield requires that our contracted IPAs and medical groups employ a standard referral processing guideline of 24 hours from the time the necessary information is received.

Our Access+ HMO plan has been designed to ensure members have a great deal of flexibility in accessing care inside the HMO network. Each Access+ HMO member chooses a primary care physician from an extensive network of general and family practitioners, internists, pediatricians, and OB/GYNs. We also ask our HMO physicians to refer members to specialists within their IPA or medical group; since we fully capitate all professional services, in-network referrals help control cost and utilization.

Cigna: Yes.

Health Net of CA: Health Net delegates medical management activities to participating physician groups (PPGs). Each PPG has its pre-certification requirements and systems, which may include direct access to specialty care. For members who are not delegated to a PPG for management, such as Health Net’s Direct Network HMO membership or other fee-for-service membership, authorization for specialty consultations is not required.  Members with a chronic condition or disease that requires continuing specialized medical care are eligible for a standing referral to a specialist. A standing referral allows extended access to a specialist for members who have life-threatening, degenerative or disabling conditions.

Kaiser Permanente: Members identified with specific chronic or high-risk conditions diagnoses, or symptoms are automatically referred for enrollment in whichever care management programs are appropriate. Participation in these programs is completely voluntary and if a member chooses not to participate, they may easily opt-out, though less than 1 percent chose to do so. Members also have direct access to all primary care services and can easily self-refer to specialty care in the Obstetrics/Gynecology, Optometry, Psychiatry, and Chemical Dependency/Addiction Medicine Departments. At some facilities, members may also self-refer for mammograms and Ophthalmology and Dermatology Department services.

UnitedHealthcare: Yes.

3.Can a pregnant member go directly to a gynecologist without waiting for approval?

Aetna: Yes.

Blue Shield of California: Yes, female members may self-refer to an OB/GYN in their personal physician’s Medical Group or IPA for an annual routine well-woman examination. Alternatively, if an IPA or medical group contracts with an OB/GYN as a network primary care physician, female members may select the OB/GYN as a primary care physician, as well.

Cigna: Yes

Kaiser Permanente: Yes, members have direct access to all primary care services and may self-refer for many types of specialty care including Obstetrics/Gynecology.

Health Net of CA: Yes.

UnitedHealthcare: Yes.

4. Do you have self-referral to a gynecologist for an annual well-woman exam?

Aetna: Yes

Blue Shield of California: Yes.

Cigna: Yes.

Health Net of CA: Yes.

Kaiser Permanente: Yes. To make access to Obstetrics/Gynecology services as convenient as possible, women can self-refer for Ob/Gyn appointments without the need for approval from their PCP. Routine Ob/Gyn care often includes basic health maintenance counseling and screening such as recommendations and reminders for immunizations, managing cholesterol, smoking cessation, and mammograms.

UnitedHealthcare: Yes.

5. Can a member with severe back pain get an appointment with an orthopedist immediately?

Aetna: The PCP determines this.

Blue Shield of California: Yes, Blue Shield developed Access+ Specialist for those times when HMO members want direct access to a specialist or physician other than their personal physician. For a slightly higher fixed co-payment, members can go directly to a specialist or primary care physician in the same medical group or IPA as their personal physician without a referral. To use the Access+ Specialist option, members simply call the physician they wish to see to schedule an appointment. Members can also choose to go through their personal physician to request a specialty referral and pay their usual office visit co-payment.

Cigna: Yes, customers should consult their primary care physician who can contact an orthopedist or other specialist (neurosurgeon, neurologist) to arrange for an immediate appointment. At the direction of the physician, a customer can also be enrolled in Cigna’s chronic condition management program for lower back pain. A registered nurse helps coordinate timely care.

Health Net of CA: Yes, as an emergency.

Kaiser Permanente: Most back pain can be managed best by the PCP in while ensuring the treatment does not impact a person’s other medical conditions. When back pain does not follow the expected course, or is unusual in presentation, our orthopedists are available for consultation. UnitedHealthcare: Yes, with a PCP referral.

6. How long does it take to get an MRI or equivalent test when a lump is found in a member’s breast or uterus?

Aetna: The PCP determines this.

Blue Shield of California: Authorization turnaround time for an urgent request is 72 hours.  In special cases, Blue Shield attempts to process the request immediately

Cigna: The customer’s physician determines the exact time frame. But, an appointment can be made immediately if medically necessary.

Health Net of CA: Health Net delegates utilization management activities to medical groups. Therefore, if the member belongs to a delegated participating physician group (PPG), the PPG has its own pre-certification requirements, and an MRI may or may not require pre-certification. If the member does not belong to a delegated PPG and Health Net is responsible for conducting utilization management, MRIs require pre-certification. Health Net processes urgent pre-certification requests within 72 hours of receipt of all information. Requests for elective MRIs are processed within five business days.

Kaiser Permanente: Except for very rare exceptions, the discovery of a lump in a woman’s breast would not prompt the use of magnetic resonance imaging (an MRI) as a diagnostic tool but would immediately receive a mammogram to better understand the nature of the lump. Similarly, the discovery of an unusual uterine growth would be investigated with more direct methods.

UnitedHealthcare: Immediately.

7. Can the member get a second opinion outside of the IPA or the medical group?

Aetna: When medically appropriate

Blue Shield of California: Yes, per benefit mandate H&S ß1374.55, Blue Shield will provide or authorize a second opinion by an appropriately qualified health care professional when requested by an enrollee or participating health professional (PCP or specialist) who is treating the enrollee.

Cigna: Yes.

Health Net of CA: Yes, a member, his or her authorized representative or a provider may request a second opinion for medical, surgical or behavioral health conditions. If the member has an HMO or POS plan and requests a second opinion about care from a Primary Care Physician (PCP), the second opinion should be authorized by the delegated participating physician group (PPG) and provided by another qualified health care professional within the PPG. If the member requests a second opinion about care from a specialist, the member may request a second opinion from any provider of the same or equivalent specialty from within the PPG or IPA. Such specialist referrals within the PPG must be authorized by the PPG. However, if the request is for a specialist outside of the PPG, the referral must be authorized by Health Net.

Kaiser Permanente: Yes, our doctors can refer members to non-Plan providers for second opinions when medical expertise relevant to their condition is not available through Kaiser Permanente providers. Any non-emergent out of Plan care must be authorized by Kaiser Permanente in order to be covered by your health plan benefits.

UnitedHealthcare: Members can get a second opinion in accordance with the specifications of the evidence of coverage (EOC) and disclosure form, as summarized below. A second medical opinion is a reevaluation of your condition or health care treatment by an appropriately qualified provider. This provider must be either a primary care physician or a specialist acting within his or her scope of practice, and must possess the clinical background necessary for examining the illness or condition associated with the request for a second medical opinion. Upon completing the examination, the provider’s opinion is included in a consultation report. Either the patient or the treating participating provider may submit a request for a second medical opinion. For additional information, please refer to “evidence of coverage” brochure.

8. Where are decisions made about specialist referrals, testing, treatment, surgery, and hospitalization?

Aetna: For our delegated groups, the PCP makes decisions with their PMG/IPA. The health plan makes this determination for non-delegated groups.

Blue Shield of California: These types of decisions are made by our contracted IPA/medical groups, and involve Blue Shield if there is a question about appropriateness, or if a member is dissatisfied.

Cigna: Primary and specialty care physicians make decisions about referrals, testing, and treatment. At times, they can coordinate care with their medical groups or IPAs. Hospitalization can require authorization from Cigna.

Health Net of CA: A Health Net member’s participating physician group (PPG) authorizes all treatment, including specialty referrals for testing, treatment, surgery or hospitalization. A member with a chronic condition or disease requiring continuing specialized medical care is eligible for a standing referral to a specialist. A standing referral allows extended access to a specialist for members with life-threatening, degenerative or disabling conditions. The member’s PCP will refer the member to practitioners who have demonstrated expertise in treating a condition or disease involving a complicated treatment regimen requiring ongoing monitoring

Kaiser Permanente: Typically, the member’s primary care physician (PCP) makes the decisions about specialist referrals, testing, treatment, surgery, and hospitalization and do not need authorization to put these decisions into action.

UnitedHealthcare: Our contracted PCPs act as the single point of contact, resource, and consultation for all health services provided to members, including specialty referrals. We believe this approach promotes familiarity with the member’s medical history and permits a single physician to monitor the member through complete episodes of care. These physicians look at the whole medical picture, as opposed to looking at symptoms from a specialist’s point of view. This method reinforces a strong doctor-patient relationship, provides early detection of medical problems, and ensures that medical referrals are appropriate and necessary.

9. What criteria are used to authorize or deny specialist referrals, treatments, or tests?

Aetna: There are a variety of reference tools, including Milliman and many that the plan has developed and copyrighted. A medical director must make all denials for medical necessity. In addition, the plan has adopted an external review process for all fully insured members.

Blue Shield of California: We use nationally recognized, evidence-based industry sources to identify services subject to precertification or prior authorization, including:

• Milliman Guidelines

• Thompson Length of Stay Criteria

• St. Anthony’s Guidelines to Medicare Coverage

• Guide to Preventive Services:  Report of U.S. Preventive Services Task Force

• Medicare Guidelines

• BlueCross BlueShield Association Technology Evaluation Center

• California Technology Assessment Forum

• Third party review agencies

• Blue Shield Medical Policy and Medication Policy

• Internally developed guidelines

Our Utilization Management Committee (UMC) is responsible for developing and maintaining the policies and procedures that define utilization management authority, including prior authorization.  Comprised of Blue Shield senior management executives (including physician representation) and functioning as the steering committee for quality activities, the UMC is responsible for reviewing on an annual basis our prior authorization policy and, if necessary, updating our list of services requiring authorization.

For HMO plans, Blue Shield may delegate prior authorization responsibilities to a medical group contracted to Blue Shield for HMO business.  Under this arrangement, the group is responsible for processing and monitoring prior authorization requests for providers, except for experimental or investigational procedures, for which Blue Shield provides the authorization. Blue Shield monitors delegated medical groups to ensure that all utilization management activities are timely, effective, and consistent with Blue Shield’s internal program.

When prior authorization is delegated, the personal physician submits a service request to the delegated IPA/medical group.  The delegated IPA/medical groups will issue a determination and contact the requesting provider by telephone/fax within 24 hours of the decision to inform the physician of the status of the authorization request.

For non-delegated HMO medical groups, Blue Shield is responsible for processing and monitoring prior authorization requests, and evaluating referrals for specified services, procedures, or drugs that require authorization.  Prior authorization determinations are made by licensed review nurses or pharmacists, and decisions are based on medical necessity and appropriateness, reflecting the application of Blue Shield’s approved review criteria and guidelines.

 Cigna: Cigna uses Milliman care guidelines. In addition, Cigna continually assesses developing technologies using evidence-based medicine and independent expert opinion to develop coverage positions, which are posted on our website. All medical decisions are based on clinical guidelines. A physician who is knowledgeable in the specialty area makes the decisions.

Health Net of CA: Health Net utilizes established written guidelines, such as InterQual Clinical criteria, along with the Health Net Medical Policy Manual, clinical practice guidelines, and the Schedule of Benefits.

Kaiser Permanente: Our doctors are not required to seek authorization for the vast majority of medical services so long as the medical specialty, treatment, or test is available within our plan.

UnitedHealthcare: We require our provider groups to demonstrate the use of appropriate medical management guidelines. We conduct annual reviews of written procedures and consider the following factors for cases that may not meet criteria: age, co-morbidities and complications, response to treatment, the psychosocial situation, and home environment. We use written criteria based on sound clinical evidence and specific procedures for applying the criteria to make utilization decisions. In addition, we apply objective and evidence based criteria and consider individual circumstances and the local delivery system. We require our delegated providers to do the same.

10. Are you monitoring the length of time for referral authorizations? What are you doing to reduce or eliminate delays?

Aetna: Yes, timeliness of decisions is part of a monthly case assessment audit. Turn-around time is monitored by annual audits and quarterly report submissions. Audits and training are used to address performance gaps

Blue Shield of California: Blue Shield’s contracted IPA/medical groups are responsible for the timeliness of decisions about referral authorization. They must comply with our standard of two working days to get all necessary information for a non-urgent referral, one calendar day for urgent referral/treatment, and immediately for emergency care. Blue Shield-delegated oversight consultant nurses perform annual audits to ensure that standards for timeliness are met. An IPA/medical group that does not meet timeliness standards for utilization management must take corrective action.

Cigna: Cigna works closely with physicians and medical groups to expedite referrals and measures customer satisfaction with the referral process on a regular basis.

Health Net of CA: Yes, it is done through access audit reports, member satisfaction surveys, HEDIS indicators, physician profiles, medical group comparison reports and member complaints. Delays are remedied through corrective action.

Kaiser Permanente: Our doctors are not required to seek authorization for the vast majority of member’s medical services. Practically every aspect of a member’s encounter with their health care team will later go through our internal utilization review process. If there are any factors found to be slowing the processing of referrals steps are taken to remove or change those factors.

11. What are the criteria and processes for getting a referral to a specialist outside of the MG/IPA or plan?

Aetna: Out-of-plan approval is done if one or more of these criteria are met: required services are not available in the group or network; required non-emergency service is available in the plan option, but is not accessible in reasonable timeframe; or the patient is a new member and was receiving services from an out-of-plan provider (reviewed on case-by-case basis).

Blue Shield of California: Personal physicians can refer patients out of the network with the agreement of the IPA/medical group or authorization from Blue Shield. Blue Shield is involved in referrals only when an IPA/medical group wants to refer out-of-network and not be financially responsible. The IPA/medical group would then contact Blue Shield for authorization and request that Blue Shield be financially liable.

Cigna: A primary care physician can request a referral for service outside the medical group or plan when the service is not available. Customers can also contact Cigna directly to arrange a second opinion.

Health Net of CA: Health Net’s contracted participating physician groups (PPGs) are delegated to provide member care, including all specialty referrals. If the PPG does not have a particular kind of specialist with which it contracts, the PPG is still responsible to find a specialist out of its network for the member. The PPG has the financial responsibility for paying the specialist. The PPG may deny the request if it has a particular kind of specialist within its network and a member requests to see a specialist that is outside the PPG’s network. The member has the option to appeal the denial with Health Net.

Kaiser Permanente: If a member needs specialty care not available within our plan, the chief of the appropriate specialty service is required to approve the referral. With a large group of our specialists practicing in more than 75 specialties and subspecialties, Kaiser Permanente is able to minimize outside referrals significantly so that our members do not need to leave the continuity of our in-plan care, which includes provider access to the member’s online medical records

UnitedHealthcare: Our contracted provider network is comprehensive and provides a qualified specialist for every covered benefit. When a service is not available within a member’s provider group, the member receives a referral to a qualified provider or specialist outside the member’s provider group, but contracted with UnitedHealthcare. Either the provider group or we will assess the medical necessity for these requests and authorize care as necessary.

Referrals to non-contracted providers rarely happen, generally only in emergencies or for specialized services not available through a contracted provider; therefore, we do not track this statistic.

12. Which complementary medical disciplines are covered or will be covered?

Aetna: Chiro rider. Acupuncture is covered when administered.

Blue Shield of California: Screening for prostate cancer is covered beginning at age 40, if at increased risk.  Increased risk factors for prostate cancer include African-American men and men with a family history of prostate cancer.

Cigna: When medically necessary, some customers can access acupuncture and chiropractic services as a component of short-term rehabilitation. Other benefit plans offer homeopathic and naturopathic services as riders. In addition, Cigna’s Healthy Rewards(r) program offers customers discounts on alternative/complementary medicine services and other health-related programs for acupuncture, chiropractic services, fitness club membership, hearing care/instruments, laser vision correction, massage therapy, vitamins, herbal supplements, non-prescription medications, and smoking cessation programs, among other programs. More information on the Cigna Healthy Rewards program is available to customers through their personalized online portal on

Health Net of CA: Health Net offers chiropractic and acupuncture benefits as supplemental benefit riders to its traditional medical benefit plans. The riders may be purchased with the HMO and POS medical plans. They are designed to complement the benefits plans, rather than replace them. The rider is only available to groups. A variety of benefit plan designs is available, including chiropractic only, acupuncture only, and a combination of chiropractic and acupuncture.

Kaiser Permanente: KP offers supplemental benefit riders for Chiropractic and Acupuncture services to commercial group members. All members also have access to discounted services through American Specialty Health Plans of California, Inc. (ASHP) for acupuncture, chiropractic care, exercise centers, fitness clubs, massage therapy, and naturopathy.

13. Do you cover blood tests for prostate cancer for non-symptomatic men? If so, at what age?

Aetna: Yes, age 40+.

Blue Shield of California: Screening for prostate cancer is covered beginning at age 40, if at increased risk. Increased risk factors for prostate cancer include African-American men and men with a family history of prostate cancer.

Cigna: Yes, for men over 50 annually or more frequently when medically indicated.

Health Net of CA: Yes, beginning at age 40 as determined by the PCP.

Kaiser Permanente: Yes, prostate cancer screenings are part of our basic coverage regardless of a man’s age, personal medical history, or the medical history of his family. Early detection of prostate cancer can lead to better outcomes. Members do not need a referral to make an appointment for a prostate cancer screening.

UnitedHealthcare: Yes, these blood tests are covered benefits. The member’s primary care physician determines the necessity of this and all other blood tests.

14. Do you cover mammograms for women with no history of breast cancer?

Aetna: Yes, age 40+.

Blue Shield of California: Yes, upon referral by a nurse practitioner, certified nurse midwife, or physician, providing care to the patient and operating within the scope of practice provided under existing law for breast cancer screening or diagnostic purposes.

Cigna: Yes, for women over 40 annually or more frequently as directed by their physician.

Health Net of CA: Yes, typically, every one to two years from ages 40 to 65+, but the PCP may authorize mammograms at his or her discretion.

Kaiser Permanente: Yes, mammograms are part of our basic coverage regardless of a woman’s personal or family history of breast cancer. Members do not need a referral to make an appointment for a mammogram.

UnitedHealthcare: Yes, mammograms for women with no history of breast cancer are covered in accordance with U.S. Preventive Services Task Force Guidelines

15. Do you have an open drug formulary?

Aetna: Yes.

Blue Shield of California: The Blue Shield Drug Formulary is a list of preferred generic and brand name drugs that have been reviewed for safety, efficacy, and bio-equivalency, and are approved by the Federal Food and Drug Administration (FDA). This formulary is developed and maintained by the Blue Shield Pharmacy and Therapeutics (P&T) Committee, which meets on a quarterly basis. The P&T Committee consists of independently licensed physicians and pharmacists in community practice and who are not employed by Blue Shield. A drug prior authorization program is available for selected drugs on the formulary as well as for non-formulary drugs to promote appropriate first-line therapy or to reserve use of certain medications with specialized uses or significant potential for misuse or overuse.

Blue Shield offers the following types of outpatient prescription drug benefit

• A closed formulary plan provides coverage for generic drugs, formulary brand-name drugs, and specialty drugs. Non-formulary drugs and most specialty drugs are covered only when prior authorization is approved.

• An incentive formulary plan provides coverage for generic drugs, formulary brand-name drugs, and specialty drugs. Non-formulary drugs are also covered for a higher co-payment. Prior authorization may be required to cover some specialty and certain non-formulary drugs. If coverage for a non-formulary drug requiring prior authorization is approved, the member is responsible for the non-formulary co-payment.

 Cigna: We typically use a closed drug formulary. However, employers can choose a three-tier or two-tier pharmacy plan if specified and agreed to in the contract.

Health Net of CA: Health Net offers a 3-tier Recommended Drug List, an open formulary that includes most generics on Tier 1, recommended brands on Tier 2 and some generics and brands on Tier 3.

Kaiser Permanente: No, our formulary is maintained and regularly updated by our doctors and pharmacists working in tandem with our Drug Information Services Team. The team independently analyzes data and reports on new drugs while doctors and pharmacists research the effectiveness and safety of each. Whenever therapeutically appropriate, we include the generic medicines in our formulary.

UnitedHealthcare: No, we use several managed formularies at different tier levels, but we do not offer an open formulary.

16. If a closed formulary, what happens if a non-formulary drug is necessary?

Aetna: Not applicable.

Blue Shield of California: For selected formulary, non-formulary and specialty drugs to promote patient safety, appropriate first-line therapy, we have drug prior authorizations for medical necessity in place to promote patient safety, appropriate first-line therapy, to manage use of specialized, high-cost or highly addictive or habit forming medications, and to help keep the cost of healthcare affordable.

The P&T Committee is responsible for establishing and overseeing drug prior authorization policies and procedures. Coverage criteria are developed under evidence-based medicine principles and current medical literature. Requests for prior authorization are considered for the following reasons:

• The requested drug, dose, and/or quantity are safe and medically necessary for the specified indication

• Formulary alternative(s) have failed or are inappropriate

• Treatment is stable and a change to an alternative may cause immediate harm

• Step therapy requirements have been met

• Relevant clinical information supports the use of the requested medication over formulary alternatives

Physicians may contact Blue Shield pharmacy services directly through a toll-free phone or fax number to request prior authorization. Some drugs may be limited to a maximum quantity and require prior authorization if a given drug’s limit is exceeded. The P&T Committee may also determine that a certain quantity of a given medication may need prior authorization to review for medical appropriateness.

All prior authorization requests are reviewed by pharmacists and pharmacy technicians to determine if the criteria approved by the P&T Committee for the requested drug meets the criteria for an exception. A coverage determination can be made via telephone within minutes if all required information is provided. Urgent prior authorization requests sent via fax are reviewed within three business days, while non-urgent requests are reviewed in no more than five business days. The member’s clinical information must be received by Blue Shield in order to start the review process. If the physician does not submit the required information, Blue Shield will send a follow-up request to the doctor. Delays sometimes occur if the physician does not provide the required information in a timely manner. If a non-formulary drug requiring prior authorization is approved under the closed formulary plan, the member is responsible for the applicable brand co-payment. If a non-formulary drug requiring prior authorization is approved under the incentive formulary plan, the member is responsible for the applicable non-formulary co-payment.

If a request from a physician for a drug that requires prior authorization for medical necessity is denied, a denial letter is mailed to the member. Included with the denial letter is the reason for denial, alternative covered therapy, if appropriate, and the Blue Shield Appeals and Grievance procedures. The physician also receives notification of the denial along with a list of preferred formulary alternatives.

 Cigna: The customer or their physician can ask for an exception to get a non-formulary drug. Cigna’s clinical staff reviews the request.

Health Net of CA: N/A

Kaiser Permanente: It is at the medical discretion of our doctors to prescribe any FDA-approved non-formulary drug if its use is in the best medical interest of the member. In these cases, the member would pay their usual cost-sharing fee as opposed to the full price they would be charged for a non-formulary medicine

UnitedHealthcare: Medically necessary non-formulary medications can be approved through our preauthorization exceptions process.